To organize the given financial data, we need to create a Comparative Income Statement for 2020 vs. 2021, followed by constructing the Statement of Cash Flows for 2021.
### 2) Comparative Income Statement for 2020 vs 2021
We will arrange the provided data into an income statement format while comparing the years 2020 and 2021.
Comparative Income Statement:
[tex]\[
\begin{array}{|l|r|r|}
\hline
\text{Item} & \text{2020} & \text{2021} \\
\hline
\text{Sales} & 3,600,000 & 3,300,000 \\
\text{Cost of Goods Sold} & 2,300,000 & 2,250,000 \\
\hline
\text{Gross Profit} & 1,300,000 & 1,050,000 \\
\hline
\text{Selling and Administrative Expenses} & 650,000 & 600,000 \\
\hline
\text{Operating Income} & 560,000 & 350,000 \\
\hline
\text{Interest Expense} & 54,000 & 52,000 \\
\text{Taxes} & 91,000 & 58,000 \\
\hline
\text{Net Income} & 415,000 & 240,000 \\
\hline
\end{array}
\][/tex]
### 3) Statement of Cash Flows for 2021
To construct the Statement of Cash Flows for 2021, we need to consider changes in balance sheet accounts and the income statement items from 2020 to 2021.
#### Operating Activities:
[tex]\[
\begin{align*}
\text{Net Income (2021)} &= 240,000 \\
\text{Add: Depreciation Expense (2021)} &= 100,000 \\
\text{Change in Accounts Receivable} &= 425,000 - 350,000 = 75,000 \quad (\text{Deduct increase}) \\
\text{Change in Accounts Payable} &= 475,000 - 375,000 = 100,000 \quad (\text{Add increase}) \\
\text{Change in Inventory} &= 550,000 - 450,000 = 100,000 \quad (\text{Deduct increase}) \\
\text{Change in Accrued Expenses} &= 60,000 - 80,000 = -20,000 \quad (\text{Deduct decrease}) \\
\end{align*}
\][/tex]
Total Cash Flow from Operating Activities:
[tex]\[
\begin{align*}
&= 240,000 + 100,000 - 75,000 + 100,000 - 100,000 - 20,000 \\
&= 285,000
\][/tex]
#### Investing Activities:
[tex]\[
\begin{align*}
\text{Purchase of Plant and Equipment} &= 2,800,000 - 2,500,000 \\
&= -300,000 \, (\text{Outflow})
\end{align*}
\][/tex]
#### Financing Activities:
[tex]\[
\begin{align*}
\text{Change in Cash} &= 95,000 - 120,000 \\
&= -25,000 \, (\text{Net change in Cash}) \\
\text{Cash Flow from Operations} &= 285,000 \\
\text{Cash Flow from Investing} &= -300,000 \\
\text{Cash Flow from Financing} &= \text{Net Change in Cash} - \text{(Cash Flow from Operations + Cash Flow from Investing)} \\
&= -25,000 - (285,000 + (-300,000)) \\
&= -25,000 - (-15,000) \\
&= -10,000
\end{align*}
\][/tex]
[tex]\[
\text{Statement of Cash Flows for 2021:}
\][/tex]
[tex]\[
\begin{array}{|l|r|}
\hline
\text{Activities} & \text{2021} \\
\hline
\text{Cash Flow from Operations} & 285,000 \\
\text{Cash Flow from Investing} & -300,000 \\
\text{Cash Flow from Financing} & -10,000 \\
\hline
\end{array}
\][/tex]
In summary, the Statement of Cash Flows for 2021 shows:
- Cash Flow from Operating Activities: \[tex]$285,000
- Cash Flow from Investing Activities: \$[/tex]-300,000
- Cash Flow from Financing Activities: \$-10,000
